Azerbaijan, Russia Agree to Boost Efforts to Develop North-South Corridor

Azerbaijan and Russia highlighted transport cooperation, particularly in the International North-South Transport Corridor (INSTC) project, during President Vladimir Putin’s two-day visit to Baku this week.

During a joint press statement on Monday, President Aliyev said the implementation of the "North-South" project has been of exceptional importance for interstate relations, as well as for joint efforts in leveraging regional transport corridors and routes.

“I must say that both the railway and automobile segments of the North-South corridor have been fully implemented and are successfully operating on the territory of Azerbaijan. At the moment, we are actively modernizing the railway segment of this corridor to increase its throughput capacity. We are considering the possibility of transporting up to 15 million tons of cargo per year, with the potential to increase this to 30 million tons,” President Aliyev stated.

President Aliyev also revealed plans for enhancing the throughput capacity of the INSTC’s railway segment traversing Azerbaijan’s territory.

“This year we have already allocated approximately $120 million (in the dollar equivalent) for the modernization of this railway section to achieve the required throughput capacity,” the President of Azerbaijan said.

For his turn, President Putin highlighted the joint plans of Baku and Moscow regarding the implementation of the INSTC project, which, according to him, will allow the two nations to reach the shores of the Indian Ocean and utilize transport cooperation for mutual benefit and interest.

INSTC connects Russian ports on the Baltic and Arctic with ports on the shores of the Persian Gulf and the Indian Ocean. This project will provide rail communication from the port of Murmansk to Iran's Bandar Abbas in the Gulf.

The INSTC contains three main routes relative to the Caspian Sea, including the Trans-Caspian Route: through the ports of Astrakhan, Olya, and Makhachkala in Russia, and the ports of Bandar Anzali, Amirabad, and Nowshahr in Iran.

The second is Eastern Route along the existing railway line through Kazakhstan, Turkmenistan, and Iran.

The Western Route extends from Astrakhan through Samur across Azerbaijan to the Astara station, and through Iran via the under-construction Astara-Rasht-Qazvin line.

In May 2023, Russia and Iran signed an intergovernmental agreement to team up for the construction of the 162 km-long Rasht-Astara railway line. The project provides for €1.3 billion Russian allotment to Iran. The project, estimated to absorb €1.6 billion total investment, is scheduled to be completed in 2027-2028, but there is currently no information available on the progress of the project.

Azerbaijan and INSTC

In May of this year, Azerbaijan Railways (ADY) successfully completed the reconstruction of the cargo yard located in the Astara region of Azerbaijan to ensure the faster handling of significantly increasing cargo transshipments along the INSTC. The multimodal transportation services along the INSTC have so far been carried out only at ADY's terminal in Astara, Iran. The agreement on the construction of this terminal was signed in 2017, and transshipment operations commenced in 2018.

The upgraded terminal offers a new service package to forwarding companies, including multimodal transportation services. Cargo entering the terminal under customs control is transshipped to its destination. One of the main advantages of the terminal is the application of discounted tariffs for cargo owners for the transportation and transshipment of accepted cargo.

According to preliminary estimates, the operation of the renovated Astara Terminal will increase transit cargo transportation along the INSTC by 10-15% by the end of this year. The terminal is expected to start full operations by the end of this year. After the Astara-Rasht railway line in Iran is put into operation, the volume of transit cargo accepted through both Astara terminals is expected to grow significantly.

From 2018 to 2023, more than 2.5 million tons of cargo was transshipped at the Astara Terminal in Iran, operated by Astara Terminal LLC, a subsidiary of ADY. During the corresponding period, the annual volume of transshipped cargo more than tripled, from 211,789 tons in 2018 to 692,402 tons in 2023. The figures recorded in 2023 were 48% higher than in 2022.

To speed up the INSTC’s development, in October 2023, Azerbaijan inaugurated the Baku-Guba-Russia toll road, a 150-kilometer highway from Baku to the Russian border. This high-quality, four-lane road, part of the INSTC, is 13 kilometers shorter than the older route.